H1 2023 European Sustainability-Linked Bonds Wrap
An Overview of the Sustainability-Linked Bond Market
Following the issuance of the first European sustainability-linked high-yield bond by Paris-headquartered aluminum maker Constellium in 2021, the European high-yield SLB market has grown considerably. New issuance in the first half of 2023 was €4.2 billion, nearly double the €2.8 billion issued in the first half of 2022. While it is tempting to attribute this increase to a heightened awareness of sustainability among issuers and investors, it needs to be considered in the context of the growth in the size of the European high-yield bond market as a whole. Within Reorg’s coverage universe, a total volume of €33.3 billion of European high-yield bonds was issued in H1’23 – more than double the €15.5 billion volume of bonds issued in the same period last year. Consequently, the SLB market has maintained a similar overall position in H1’23 in terms of share of the European high-yield bond market compared with the same periods in 2022 and 2021. SLBs made up 13% of H1’23 European high-yield bonds compared with 15% in H1’22, 11% in H1’21 and 13% in 2022 and 16% in 2021.
In terms of the number of SLB deals, the picture is slightly different. While five SLBs were issued in each of the first halves of 2023 and 2022, there were 15 SLB deals in H1’21 and only one in H2’22. So while the size of the SLB market has grown, its share of the broader European high-yield bond market has remained relatively constant, with the number of SLB deals in any period fluctuating with the broader market. Although we would have liked to see SLBs grow their share of the broader European high-yield market, we’re happy to settle for a show of resilience in a turbulent market.
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